12 °c
London
Saturday, September 23, 2023
No Result
View All Result
FurtherAfrica
  • Countries
    • Angola
    • Botswana
    • Cape Verde
    • DRC
    • Eswatini
    • Ethiopia
    • Kenya
    • Malawi
    • Mauritius
    • Mozambique
    • Namibia
    • Nigeria
    • Rwanda
    • South Africa
    • Tanzania
    • Uganda
    • Zambia
    • Zimbabwe
  • Interviews
  • Understanding
  • Videos
  • Travel
  • Weekend
  • About
FurtherAfrica
  • Countries
    • Angola
    • Botswana
    • Cape Verde
    • DRC
    • Eswatini
    • Ethiopia
    • Kenya
    • Malawi
    • Mauritius
    • Mozambique
    • Namibia
    • Nigeria
    • Rwanda
    • South Africa
    • Tanzania
    • Uganda
    • Zambia
    • Zimbabwe
  • Interviews
  • Understanding
  • Videos
  • Travel
  • Weekend
  • About
No Result
View All Result
FurtherAfrica
No Result
View All Result
Home Africa

South Africa’s credit rating downgraded to negative

FurtherAfrica by FurtherAfrica
November 4, 2019
in Africa, Credit Rating, Economy, South Africa
Reading Time: 2 mins read
859 9
0
Where Are The Private Equity Buyers In Sub-Saharan Africa Buyer’s Market?
Share via QRWhatsappShare on FacebookShare on TwitterLinkedInPinteresteMail

International rating agency Moody’s on Friday night downgraded South Africa’s credit rating from “stable” to “negative”. Outlook on South Africa’s Baa3 ratings changed to negative on risk of continued deterioration in finances, the agency said.

Acute financial stress for state-owned enterprises, in particular electricity utility Eskom, continues to require sizeable ongoing support from the government, Moody’s said in a statement.

The development of a credible fiscal strategy to contain the rise in debt, including in the 2020 budget process and statement, will be crucial to sustain the rating at its current level, said Moody’s.

South Africa’s high unemployment, income inequality and related social and political challenges have proven to be a greater obstacle to government plans to raise potential growth and contain fiscal deficits than expected a year ago, Moody’s said.

“We have revised our medium-term GDP growth projections for South Africa to 1%-1.5% percent, down from earlier expectations of a gradual increase to 2.5%-3% percent,” said the agency.

The downgrade was seen as the final step before Moody’s strips South Africa of its “investment grade” Baa3 long-term foreign-currency and local-currency issuer rating, which will leave it at “junk.”

Two other major international rating agencies – S&P Global Ratings and Fitch — have placed South Africa’s creditworthiness to sub-investment grade (commonly known as junk status).

“The current rating rests on the government’s ability to quickly develop a credible strategy to halt and ultimately reverse the rise in debt. Such a strategy has not been forthcoming to date,” Moody’s warned.

South Africa’s debt-to-GDP ratio, which as recently as two years ago was at 50.6 percent, is currently 61 percent and will grow to above 71 percent of GDP by 2022.

The negative outlook signals in part Moody’s rising concern that the government will not find the political capital to implement the range of measures it intends, and that its plans will be largely ineffective in lifting growth, the agency said.

While the government has some plans to address problems like unemployment and low growth, it has faced obstacles mainly due to outstanding vested interests, and the social and political challenge of imposing measures that are initially likely to be detrimental for parts of the population, according to Moody’s.

For example, the country’s new Mining Charter is unlikely to boost investment in the sector given persisting regulatory uncertainty amid ongoing appeals against some provisions of the charter, said Moody’s.

Source: Xinhuanet

Related

Tags: credit ratingdebt-to-GDP ratioDowngradeFeatureFitchhigh unemploymentincome inequalityjunkMoodyspolitical challengesS&P Global Ratingssocial challengesSouth Africaюжная-африкаجنوب-أفريقيا南アフリカ南非
ScanSendShare347Tweet217Share61Pin78Send
FurtherAfrica

FurtherAfrica

Founded in 2015 FurtherAfrica is an online platform centralising news and content focusing on the development and growth story of the African continent.

Related Posts

Weekend

Top 5 islands in Kenya you must visit

by See Africa Today
September 23, 2023
Weekend

6 stunning beaches in Egypt to visit in 2023

by See Africa Today
September 23, 2023
The Forbes Billionaires’ list: Africa’s richest people 2022
Development

Opportunity through adversity: 8th annual Africa risk-reward index

by Rafael Carvalho
September 23, 2023
Tech

Elon Musk’s Starlink is off to a bright start in Africa

by The Exchange
September 22, 2023
Africa

Nigeria’s smart city dream gets US$200M boost from Afreximbank

by The Exchange
September 22, 2023
Mozambique eVisa
 
MozParks

Translate this page

Read the Latest

Weekend

Top 5 islands in Kenya you must visit

by See Africa Today
September 23, 2023
0

Kenya is a small paradise teeming with beautiful landscapes, rich culture and breathtaking sceneries, not forgetting some of the best...

Read more

6 stunning beaches in Egypt to visit in 2023

September 23, 2023
The Forbes Billionaires’ list: Africa’s richest people 2022

Opportunity through adversity: 8th annual Africa risk-reward index

September 23, 2023

Elon Musk’s Starlink is off to a bright start in Africa

September 22, 2023

Nigeria’s smart city dream gets US$200M boost from Afreximbank

September 22, 2023

FurtherAfrica Partners Network

The Exchange Farmers Review Africa 360 Mozambique
TechGist Africa Energy Capital & Power Club of Mozambique
Taarifa Rwanda Web3Africa See Africa Today
Africa Global Funds Novafrica CrudeMix Africa
Harambee Africa Botswana unplugged Financial Insights Zambia
O Económico Digilogic Africa  

Subscribe to FurtherAfrica

Enter your email address to receive new articles on your email.

Join 107.3K other subscribers
FurtherAfrica

© 2021 FurtherMarkets

FurtherAfrica is a FurtherMarkets Limited platform

  • Countries
  • Interviews
  • Understanding
  • Videos
  • Travel
  • Weekend
  • About

Follow Us

No Result
View All Result
  • Countries
    • Angola
    • Botswana
    • Cape Verde
    • DRC
    • Eswatini
    • Ethiopia
    • Kenya
    • Malawi
    • Mauritius
    • Mozambique
    • Namibia
    • Nigeria
    • Rwanda
    • South Africa
    • Tanzania
    • Uganda
    • Zambia
    • Zimbabwe
  • Interviews
  • Understanding
  • Videos
  • Travel
  • Weekend
  • About

© 2021 FurtherMarkets

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?